Our Response to the ESMA Trading Obligation Consultation

ESMA published their latest Consultation on Trading Obligation for Derivatives under MIFIR on 19th June 2017. As we stated back in June, we have concerns about the quality of the data used to determine the Trading Obligation. We have therefore offered to make all of our SDR data available to ESMA as part of our response to the consultation.

The responses are available to view on the ESMA Website. As some of the media have picked-up on, the Trading Obligation proposed by ESMA differs from the CFTC’s execution mandate. This seems to add unnecessary complexity to market structure.

Our response can be summarised as;

• EUR swaps data looks okay, all other currencies have questionable data.
• Access to liquidity is not geographically constrained, therefore we believe a global source of data is the most relevant to determine the Trading Obligation.
• Using a global data set would naturally lead to an alignment with the CFTC’s execution mandate, resulting in simplified global rules.

Clarus are the only Fintech firm to have responded to this consultation. We find this slightly surprising, as firms cannot hope to impact markets without staying on top of current issues. Our response was strongly shaped by our detailed understanding of the data, leveraging both SDRView and CCPView.

Our response can be found under “Fintech” on the ESMA website:

https://www.esma.europa.eu/press-news/consultations/consultation-trading-obligation-derivatives-under-mifir-0#TODO